Strategic Planning Test 1

Rivalry among competing firms is usually the most powerful of the five competitive forces. The strategies pursued by one firm can be successful only to the extent that they provide competitive advantage over the strategies pursued by rival firms. Changes in strategy by one firm may be met with retaliatory counter moves, such as lowering prices, enhancing quality, adding features, providing services, extending warranties, and creasing advertising. As rivalry among among competing firms intensifies, industry profits decline, in some cases to the points where an industry becomes inherently unattractive.

According to Michael Porter, what are the forces that together define the nature of competitiveness in a given industry? Discuss the one force that is usually the most powerful.

Strategy implementation is the most difficult stage in the strategic-management process because it requires personal discipline, commitment and sacrifice. Successful strategy implementation hinges upon managers' ability to motivate employees, which is more of an art than a science.

Describe why a mission statement is so important in the strategic-management process

Many organizations today develop a vision statement that answers the question "What do we want to become?" Developing a vision statement is often considered the first step in strategic planning, preceding even development of a mission statement. Many vision statements are a single sentence. For example, the vision statement of Stokes Eye Clinic in Florence, South Carolina, is "Our vision is to take care of your vision." Mission statements are "enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of a firm's operations in product and market terms." It addresses the basic question that faces all strategists: "What is our business?" A clear mission statement describes the values and priorities of an organization. Developing a mission statement compels strategists to think about the nature and scope of present operations and to assess the potential attractiveness of future markets and activities. A mission statement broadly charts the future direction of an organization.

Differences between vision and mission statements

LOW-COST LEADERSHIP Striving to be the overall low-cost provider in industry. This strategy emphasizes efficiency, by producing high volumes of standardized products. The firm hopes to take advantage of economies of scale and experience curve effects. The product is often a basic no-frills product that is produced at a relatively low cost and made available to a very large customer base. BROAD DIFFERENTIATION-Striving Striving to build customer loyalty by differentiatingone's product offerings from rivals' products BEST-COST PROVIDER STRATEGY Striving to give customers more value for themoney by combining an emphasis on low cost with an emphasis on upscaledifferentiation FOCUS STRATEGY BASED ON LOW COST Concentrating on a narrow buyersegment, out-competing rivals on basis of lower cost FOCUS STRATEGY BASED ON DIFFERENTIATION Offering niche members aproduct or service customized to their needs

Discuss each of Michael Porter's generic strategies

A model that sees certain types of resources (VRIO) as key to superior firm performance; says the firm matters more than the industry.- Valuable- Rare- Costly to Imitate- Organized to capture value

Explain the resource-based view and its relation to strategic management.

it is sustainable because more flexible and adaptable

Explain what it means for a mission statement to have a customer orientation

1) using strategic planning to gain control over decisions and resources;2) doing strategic planning only to satisfy accreditation or regulatory requirements;3) too hastily moving from mission development to strategy formulation;4) failing to communicate the plan to employees, who continue to work in the dark;5) top managers making many intuitive decisions that conflict with the formal plan;6) top managers not actively supporting the strategic-planning process;7) failing to use plans as a standard for measuring performance;8) delegating planning to a "planner" rather than involving all managers;9) failing to involve key employees in all phases of planning;10) failing to create a collaborative climate supportive of change;11) viewing planning to be unnecessary or unimportant;12) becoming so engrossed in current problems that insufficient or no planning is done; and13) being so formal in planning that flexibility and creativity are stifled.

Identify any five pitfalls in strategic planning for which management should watch out.

Planning, Organizing, Implementing and Controlling Involves analyzing information and making decisions about what needs to be done. Is concerned with accomplishing tasks most effectively and arranging resources to complete all necessary work. Involves carrying out plans and making sure that adequate personnel are available to accomplish all the necessary tasks. Involves evaluating results to determine if objectives have been accomplished as planned.

Identify the four basic functions of management, and describe each function.

Improves Stability Decreases Risks. Strong Labor Supply. Strengthens Brand Management. Identifies SWOT.

List any five non-financial benefits to a firm that engages in strategic management

1. lack of knowledge or experience in strategic planning, 2. poor reward structures, 3. firefighting, 4. waste of time, 5. too expensive, 6. laziness, 7. content with success, 8. fear of failure, 9. overconfidence, 10. prior bad experience, 11. self-interest,1 2. fear of the unknown, 13. honest difference of opinion, 14. suspicion.

List any five of the reasons given for why some firms do not strategic planning

Most organizations can benefit from strategic management, which is based upon integrating intuition and analysis in decision making. Choosing an intuitive or analytic approach to decision making is not an either-or-proposition. Managers at all levels in an organization inject their intuition and judgment into strategic-management analyses. Analytical thinking and intuitive thinking complement each other. Operating from the" I've-already-made-up-my-mind-don't-bother-me-with-the-facts" mode is not management by intuition; it is management by ignorance. Drucker says, "I believe in intuition only if you discipline it. 'Hunch' artists, who make a diagnosis but don't check it out with facts, are the ones in medicine who kill people, and in management kill businesses." In a sense, the strategic-management process is an attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business, and to couple it with analysis.

Value of Integrating and analysis

Cultural Differences Poor/unclear leadership Insufficient planning Poor Commitment Disagreement over strategies

What are four common problems that cause joint ventures to fail?

1) economic forces,2) social, cultural, demographic and environmental forces,3) political, governmental and legal forces,4) technological forces and5) competitive forces.Examples of each are as follows: 1) level of disposable income, 2) immigration and emigration rates, 3) voter participation rates, 4) technological advancements, and 5) potential moves a competitor could make.

What are the five major types of external forces that should be examined as part of an external audit? Give an example of each type of force.